Was Marx’s critique of capitalism right after all? It lasted longer than you expected back in the 19th century, but could it be that capitalism is just an episode of history that will end at some point because the system will collapse as a result of its internal contradictions? At the end of the 20th century, when the capitalist West defeated the communist East in the battle between systems, were we too quick to dismiss Karl Marx and his economic theories?

Capitalism without an ethic and a legal framework is inhumane. This was my conclusion from the finance and banking crisis. I already believed years ago that wild speculation is a sin. I have been an outspoken critic of the culture of greed in modern capitalism and have repeatedly pleaded with managers to subscribe to the social components of a social market economy. I criticise the audacious salary hikes of top managers. Neither primitive capitalism nor a return to Marxism will help create global justice. We need a structured market economy, not a revolution. The central question of the 21st century will be how to solve global problems like social injustice and poverty.

What a pantload of bull crap! To answer your questions, Reinhard, No! Marx’s critique of capitalism was not right after all. No! the capitalist system will not collapse as a result of its internal contradictions. No! we were not too quick to dismiss Karl Marx and his economic theories. We may have been too quick to not hold when the USSR collapsed the same kind of tribunals held after Hitler and the Third Reich were defeated.

I reject your narrative that an inhumane unbridled capitalism has flourished, and that capitalism promotes a culture of greed. I believe that there will always be poor people, there will always be injustice, and there will always be sinners.

Never did John Locke, David Hume, Adam Smith, John Stuart Mill, Ayn Rand, F.A. Hayek, or Milton Friedman advocate unbridled capitalism or freedom. It seems that socialists have badly sullied the reputation of liberty. The socialists have repeatedly alleged that capitalism caters to so-called capitalists and gives them unbridled powers to exploit the weak. But that is totally false. Philosophers of liberty have always insisted that freedom comes with responsibility and justice. Adam Smith opposed mercantilism and monopolistic industrial interests. David Ricardo wanted more competition and free trade. Adam Smith and John Stuart Mill advocated labor unions to face the economic power of the owners of industry.

By repeating lies against liberty long enough, socialists have made it appear that the system of natural liberty encourages corruption and things like the sub-prime crisis. But what are the actual facts? Capitalism begins by looking at human nature. Hobbes and Locke, pointed out that since human nature is far from perfect, some people will always try to cheat, mislead, and misuse their powers. So if anyone cheats, then systems of justice should catch and punish the cheats. Thus everyone must be held equally to account and no one is to be above the law. In this manner, by ensuring all crimes are punished, capitalist societies are today among the most ethical on this planet.

Capitalism is also a system of continuous improvement. Lessons from events like the sub-prime crisis are quickly learned and such events prevented from happening again. Some events are complex and finding their causes can take time; but overall, capitalism is a political and economic system founded on democratic choice, law and order, and continuous improvement. And since the governance of capitalist societies is built on the system of checks and balances advocated by Montesquieu and Thomas Jefferson, the concept of capitalism being unbridled simply does not arise!

Our quarrel must be with socialism. In socialist societies, based as the spurious concept of economic equality, state-sanctioned corruption is the norm.

So who is really unbridled? Who is really immoral? Is it socialist countries ? where the governments are totally corrupt, where industrialists are gifted monopoly powers by the corrupt state, and where lives of workers are treated with disdain ? or is it the capitalist West where governments wage a systematic battle against all forms of corruption and irresponsible behaviour? Clearly, it is not capitalism but socialism we must be afraid of.

Unlike Karl Marx, who was a revolutionary, Adam Smith was a reformer. Where Karl Marx saw class struggle, Adam Smith saw special interests that were often at odds with the public interest. If Adam Smith were alive today, it is unlikely that he would join the chorus of triumphant anticommunists. Instead, he would warn that capitalism is prone to excess. He would observe that vigilance is required to ensure that the political system is not manipulated for the economic benefit of a few to the detriment of the entire society. He would be advocating political reforms to make sure that the system is not corrupted by special interests.

Adam Smith described free markets as an obvious and simple system of natural liberty. He did not favor the landowner, the factory owner, or the worker, but rather all of society. He saw, however, self-defeating forces at work, preventing the full operation of the free market and undermining the wealth of all nations.

The political foundation of Marx’s utopia always had a critical structural flaw. He never explained how the members of the transitional dictatorship would be chosen, and why they would voluntarily relinquish their authoritarian power.

That critical structural flaw in the quest you have, Reinhard, to solve global problems like social injustice and poverty is the one you better think long and hard about.